KeNo's Housing and Economic Portal: Monday June 7 Housing and Economic stories

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TOP STORIES:

Rampant foreclosures leave condo owners stuck with fees - (www.tampabay.com) To most people, Brittany's Place in Largo looked no different than the hundreds of other blandly attractive apartment complexes built in Florida in the 1970s and '80s. To four Miami men, it looked like gold. As the condominium boom neared a frenzied peak in 2005, they hit on a plan: buy the 96-unit complex, spend a few thousand dollars per apartment on showy upgrades, then sell the units as condos at a tidy profit. It seemed like a fine idea, one that had enraptured developers all over the state. Now, five years later, buyers like Peggy Bodine have discovered just how wrong a condo conversion can go. So many units are in foreclosure that Bodine is one of the few owners still paying maintenance fees. There is no money in the budget to repaint the outside walls, to repair the cracked pool deck, to pay the insurance premium due this month. The clubhouse has been stripped of most of its furnishings. Worst of all, Bodine says, "they dumped the association on us.'' On April 30, the developers washed their hands of Brittany's Place. They transferred control to a condo association board made up of owners like Bodine, a math teacher who acknowledges she knows little about condo law or the duties of a condo board. What she does know is that the burden of maintaining Brittany's Place is falling on her and a few other owners. "We're going to have a special assessment because there's no money for anything,'' Bodine says. "If there's only 12 people who are paying their association dues that means 12 units will be assessed for 96 units. The special assessment is going to be so excessive that the 12 of us will end up losing our units and we haven't done anything wrong.''

UC Davis vet school feels pain of budget cuts - (www.sacbee.com) The wobbly economy has taken a bite out of the people who care for our animals and pets. State budget cuts and reduced spending by animal owners have triggered layoffs and furloughs at the nationally acclaimed UC Davis School of Veterinary Medicine. Business at the school's hospital has flattened as fewer owners of horses and cows opt for expensive treatments. New vets, saddled with debt, face uncertain prospects if they enter the private practice market. Some are opting to continue their training instead. The UC Davis veterinary school, which relies on state funding for about a third of its budget, has seen cuts of about $5 million in the past three years. About $2 million of the cuts were to the on-campus William R. Pritchard Veterinary Medical Teaching Hospital. Last year, the hospital saw a 20 percent drop in demand for large-animal treatments, which range from simple $150 to $200 neutering to complex internal organ and bone-fracture surgeries costing $2,500 to $10,000.

Corporate Bonds Are Feeling Strain - (online.wsj.com) The U.S. corporate-bond market is picking itself up after being flattened again by Europe's debt debacle. But it may not be back to the races. Bond prices rebounded last week from their selloff the week before. Yet they are still well off the year's highs. Bond yields—which move opposite from prices—are still near two-month highs relative to Treasurys. Across the credit markets, signs of strain linger, despite European leaders' efforts earlier this month to inject calm with a $1 trillion bailout package for troubled countries. Investors pulled $1.7 billion out of high-yield mutual funds last week, the third-biggest withdrawal on record, according to data from Lipper FMI. Forty companies sold new bonds last week, most of them investment-grade, compared with an average 57 a week in April, according to Dealogic. They raised about $15 billion, up from $3 billion the week before but below the $20 billion, on average, raised weekly this year.

Muni riders frustrated, resigned - (www.sfgate.com) For Kathy Mata, a ballet dancer who lives in the Stonestown Apartments, the latest Muni service cuts just cost her $15. Mata enjoyed an evening performance of "Romeo and Juliet" downtown last weekend, then waited for a 17-Parkmerced bus that would never come. The last 17 bus now heads outbound from West Portal at 9:40 p.m. instead of 11 p.m., leaving Mata to hail a late-night cab. "Who knows how many times I'll have to take a cab now," Mata said. She could have taken a different bus, then transferred to reach her destination. "But with these buses," Mata said, "God knows when I would have actually gotten home." One week after Muni implemented a 10 percent overall service reduction to save an estimated $29 million a year, the largest one-time cut in the agency's history has some riders deeply frustrated. For others, the changes call for shoulder-shrugging resignation: Whattayagonnado?

Fannie & Freddie don't reduce balances on their mortgages - (money.cnn.com) Pressure is mounting on loan servicers and investors to reduce troubled homeowners' loan balances...but the two largest owners of mortgages aren't getting the message. Fannie Mae and Freddie Mac, which are controlled by the federal government, do not lower the principal on the loans they back, instead opting for interest rate reductions and term extensions when modifying loans. But their stance is out of synch with the Obama administration, which is seeking to expand the use of principal writedowns. In late March, it announced servicers will be required to consider lowering balances in loan modifications. And just who would tell Fannie and Freddie to start allowing principal reductions? The Obama administration. Asked whether they will implement balance reductions, the companies and their regulator declined to comment. The Treasury Department also declined to comment.

Builders at it again, with Fed's fake money - (www.nytimes.com) In a plastic tent under a glorious desert sky, Richard Lee preached the gospel of the second chance. The chance to make money on the next housing boom “is like it’s never been,” Mr. Lee, a real estate promoter, assured a crowd of agents, investors and bankers. “We’re going to come back like you’ve never seen us before.” Home prices in Las Vegas are down by 60 percent from 2006 in one of the steepest descents in modern times. There are 9,517 spanking new houses sitting empty. An additional 5,600 homes were repossessed by lenders in the first three months of this year and could soon be for sale. Yet builders here are putting up 1,100 homes, and they are frantically buying lots for even more. Las Vegas is trying to recover by building what it does not need. It is an unlikely pattern being repeated in many of the areas where the housing crash was most severe. “There’s a surprising rebound in the hardest-hit markets,” said Brad Hunter, chief economist with the consultant Metrostudy. “People are buying again.” From the recession’s lows, construction has nearly doubled in Las Vegas, Phoenix and Tucson. It is up 74 percent in inland Southern California and soaring in Florida. Some of the demand is coming from families that are getting shut out of the bidding for foreclosures by syndicates that pay in cash, and some is from investors who are back on the prowl. Land and labor costs have fallen significantly, so the newest homes are competitively priced. Some of the boom-era homes, meanwhile, are in developments that feel like ghost towns. And many Americans will always believe the latest model of something is their only option, an attitude builders are doing their utmost to reinforce.

Scottsdale house prices remain in free fall - (www.azcentral.com) Scottsdale home prices continue to fall even as the Valley resale housing market has seen a 5.5 percent increase in prices from January to April. Scottsdale's median home price was $360,000 in April, down 10 percent from a year ago and a dip of 3.2 percent from January, according to an Arizona State University Realty Studies monthly report released this week. Foreclosures, short sales and fix-and-flip deals on recently foreclosed properties continue to drag down the Scottsdale market, making it harder for traditional sellers to get good prices for their homes. The ASU report shows foreclosure activity is hitting higher-priced homes as well. In April, 17 homes valued at more than $1 million were foreclosed on, including three over $2 million.

OTHER STORIES:

Good news! Bailouts saved banker bonuses! - (video – www.thedailyshow.com)

Speedy New Traders Make Waves Far From Wall St. - (www.nytimes.com)

Frank Says Senate’s Stronger Rules Will Sway Financial Bill - (www.bloomberg.com)

‘Lack of Trust’ Pummels Bank Lending in Europe: Credit Markets - (www.bloomberg.com)

Obama's terms for financial overhaul remain mostly intact - (www.washingtonpost.com)

Libor rises on debt concerns - (www.ft.com)

Sovereign Funds Tightened the Spigot - (online.wsj.com)

EU Faces Trichet’s ‘Quantum Leap’ Call as Euro Falls - (www.bloomberg.com)

China's growth passes peak and more tightening feared - (www.reuters.com)

China’s ‘One-Off’ Trade Deficit May Return, Government Says - (www.bloomberg.com)

Worry that Gulf oil spreading into major current - (finance.yahoo.com)